Microsoft, Ericsson and Sony, the end of a ménage à trois

8 Oct 2001 at 07:06 GMT Marc van Impe / Newscasters

Microsoft pulls out of joint venture with Ericsson

L.M. Ericsson Telephone confirmed on Friday that from now on it will take full control of its joint venture on mobile technology with Microsoft, Ericsson Microsoft Mobile Venture. "We have decided not to move forward with a joint company with Microsoft and to change the legal framework to that of a licensing agreement," Ericsson spokeswoman Aase Lindskog told IDG's London correspondent Laura Rohde. The Mobile Venture company will now become part of Ericsson's global systems integration business, Lindskog said.

Microsoft did not comment on the dissolution of the joint venture, which was launched in Dec. 1999 with much fanfare from both Microsoft president, now CEO, Steve Ballmer and Ericsson President and CEO Kurt Hellström.

The partnership was initially designed to use Ericsson's WAP telephone technology and Microsoft's Internet-enabled mobile phone software platform, Microsoft Mobile Explorer (MME), to produce mobile handsets.

The alliance would provide Microsoft with a firm position in the mobile market, and Microsoft CEO Balmer then said he hoped all 30 million people that were then using Exchange for e-mail would use the platform for e-mail access over mobile phones when it became available.

"We have noticed that the demand from the mobile market is much bigger now than when we started this agreement, and it also took us a lot longer to develop our product than we had thought," Lindskog said Friday.

In September of last year, Microsoft and Ericsson announced that they expected the first jointly produced mobile handsets to be commercially available for mobile operators by the end of 2000, something which did not materialize.

The joint venture was to be 70 percent owned by Ericsson with Microsoft taking a 30 percent stake, but that transaction was never carried out, Lindskog said. Ericsson Microsoft Mobile Venture "has always been fully owned by Ericsson and Microsoft never purchased their 30 percent," Lindskog said.

News that the joint venture was facing dissolution first came to light on Thursday when the Swedish newspaper Dagens Industri reported that Ericsson was rethinking the relationship and had held crisis talks with Microsoft Wednesday night. Just two days prior to that, Ericsson and Sony formally announced their new mobile phone brand, Sony Ericsson Mobile Communications.